Not too long ago, the term “direct-to-consumer businesses” called to mind cheesy infomercials on late-night TV. How many steak knives do I get if I purchase the vacuum/blender? Brands that used DTC channels haven’t been taken too seriously over the last decade.
But times have changed. Moving from TV, direct mail and multi-level schemes to digital channels has transformed the DTC market opportunity. DTC brands are now considered tastemakers and innovators. They’re driving a shift from traditional marketing channels to digital experiences that market, sell and build their brand.
Direct to consumer: high customer engagement with a strong brand
DTC brands often begin, from day one, with a digital-first mindset.
They use digital channels to engage with customers, giving customers the opportunity to communicate their opinions about specific products and the brand in general. These insights — when brands take advantage of it — help shape their future decisions. If this communication cycle is visible, it can foster an intense loyalty. See how Glossier became a billion-dollar company by creating a cult-like following.
What’s more, digital-first brands offer consumers an open and transparent look into the company. They share the human side of business, admit mistakes and show how they are trying to live their mission and values.
This is in stark contrast to DTC infomercials of the past. It’s also a competitive edge over traditional retail and advertising channels that place gatekeepers between a brand and their customers. Transparent and open communication comes with tangible rewards, with 73 percent of consumers saying they would be willing to pay more for a product that offers complete transparency, according to a study from Label Insight.
How digital-first is an integral part of the direct-to-consumer success story
The shift to digital has empowered brands to do things that were simply not possible on a large scale a decade or two ago. The growing preference for digital means that digital channels can compete with traditional channels. Testing at the Google Media Lab found that digital video’s reach and scale were comparable to TV. The results were so compelling, the company shifted from a TV-first mentality to a digital-first media mix.
Digital sits at the center of the modern DTC model. By adopting a digital-first approach, these brands have transformed direct-to-consumer from a passé marketing technique to an effective business strategy.
Foregoing traditional models for a digital-first approach gives DTC brands several key advantages:
DTC brands use digital distribution to bypass gatekeepers.
The cost of launching a digital storefront and underlying distribution processes has dropped dramatically, but that is only part of the story. The real benefit is that it brings brands closer to their customers. Instead of building relationships with retailers and advertisers, they are building relationships directly with their customers.
Direct access enables DTC brands to be more customer-centric.
With direct access to their customers and the ability to collect and use data throughout the customer lifecycle, DTC brands can develop a much deeper understanding of their audience than through traditional retail channels. They might start with a Kickstarter campaign and use social media to gather feedback on prototypes. In this way, DTC brands can start building a loyal base before they even launch a product. Users feel like they are a part of the brand’s success. Brands build on this to create a community.
DTC brands hyper-personalize their messaging and products.
Instagram replies that tag users by name, customizable products and personal recommendations based on previous behavior enhance the customer-brand connection.
DTC brands can create digital experiences that add value (and drive revenue).
For DTC brands, the ease and convenience of the digital shopping experience are a core part of the product. The best DTC brands also build social sharing and referrals into the product, explains CB Insights in their analysis of 14 direct-to-consumer success stories. They illustrate this with an example from Warby Parker, in which people who shared pictures and video of themselves trying on glasses were 50 percent more likely to complete their purchase — driven by an AR mobile app that lets users “try on” the glasses in the comfort of their own homes. This helped inspire an entire new generation of DTC brands.
Digital enables DTC brands to be nimble and agile.
Many DTC brands are digital natives. “Without any established relationships with traditional brick-and-mortar retailers, D2C startups have been free to define their route to market without any of the real or imagined constraints of their legacy counterparts,” writes Forbes Councils member Rafael Schwarz in “What Is Driving Direct-To-Consumer Marketing Success.” They can choose the best platforms and services to meet their needs. This often means choosing services that integrate easily and can be assembled into a flexible custom stack. Digital can enhance their speed and agility from internal processes to customer touchpoints.
A digital-first strategy is about more than selling products
The benefits of a digital-first strategy can be the key to transforming businesses. But business leaders must understand that digital-first is not just a marketing channel. Digital-first is about building relationships.
Consumers choose brands based on more than packaging and campaign slogans. They want to know if you’re environmentally conscious, aligned with their political views and if you treat employees with respect. These things might seem like they have little to do with the product, but they are part of the digital experience — an experience that is inseparable from the product.
Digital channels bring you closer to your customers. But being closer means you must be authentic, customer-centric and true to your mission and values at every level of the business.
Learn more about digital-first experiences and how Contentful and its partners can help you build a digital-first model that works.